Why are the objects in my hair particle system not sitting on top of the ground?
This is because hair particles use the global +X axis as "up" for orienting the particle.

If you rotate your objects 90&deg; on the Y axis so that the direction you want to be facing up is instead facing global +X, you get the following result:



It isn't necessary to apply the rotation, since you have Rotation enabled in Particle Settings > Render.

Note that if you don't have Rotation enabled, for some reason the "up" direction becomes global +Y, and you will need to apply rotation for changes to take effect.